Skip to main content

About this Show

Squawk Box

News/Business. Becky Quick, Joe Kernen. Business news and talk as the trading day unfolds on Wall Street. New. (CC)

NETWORK

DURATION
03:00:00

RATING

SCANNED IN
San Francisco, CA, USA

SOURCE
Comcast Cable

TUNER
Virtual Ch. 58 (CNBC)

VIDEO CODEC
mpeg2video

AUDIO CODEC
ac3

PIXEL WIDTH
528

PIXEL HEIGHT
480

TOPIC FREQUENCY

Romney 10, America 10, North Carolina 10, Charlotte 10, Joe 9, Obama 9, China 9, Clint 8, Spain 8, New York 8, Europe 8, Jack Reed 7, Kevin 7, U.s. 6, Africa 6, Jimmy Carter 6, S&p 5, Obama Administration 5, Joe Kernen 5, Rendell 5,
Borrow a DVD
of this show
  CNBC    Squawk Box    News/Business. Becky Quick, Joe Kernen. Business news and  
   talk as the trading day unfolds on Wall Street. New. (CC)  

    September 4, 2012
    6:00 - 9:00am EDT  

6:00am
who's back from vacation. labor day marking unofficial end of summer so back to business on wall street this morning. plus a big lineup to kick off our coverage of the dnc convention. ed rendell, jack reed, jarod bernstein, steve forbes and bill burton. let's get you up to speed on this morning's other top stories. first up, the ecb will be meeting on thursday. this is expected to be a big meeting. they're expected to go ahead and announce details of a bond buying program despite the region's sovereign debt cries. mario draghi is telling european lawmakers purchases of short-term sovereign bonds by central bank would not breach eu rules. in the meantime, moody's is changing its outlook on aa rating of european union to negative and the agency is warning it might downgrade the bloc if it decides to cut the
6:01am
ratings on the eu's four biggest budget backers, germany, france, oous and netherlands which make up 45% of the budget. back in the united states, the new york attorney general is investigating whether private equity firms have abused tax strategy in order to cut hundreds of millions from their tax bills. eric schneiderman wants documents that reveal whether they converted certain fgt fees into investments which are taxed at a lower rate than ordinary xhk. economy. schneiderman is looking to see if he's trying to embarrass bain. andrew, right now, i'll send it over to you. >> fascinating story. hope we talk about that in a little bit. corporate headlines this morning. valiant pharmaceuticals is buying metacis for $24 a share.
6:02am
a 39% premium. the deal boosting valiant skin care offering and adds botox to it's portfolio. oracle is launching an appeal on five-year long court case against s.a.p. last month they agreed to pay oracle $306 million over copyright infringement allegations. great to be back. what do you think, a little right here in. >> i've never heard of disport? >> botox? >> you're not who i'm worried about. it's clear by saying you might need it, i know what you're actually saying. >> i, i -- >> it's okay. mr. gorilla in the mist. a few morning analyst calls to tell you about. barclays is upgrading -- andrew
6:03am
was in africa, that's why -- >> i know. >> 1 percenter vaker of a lifetime. luxury? i would feel -- for someone that fairness and feeling guilt y don't you feel worse seeing all the people that aren't doing as well when you -- >> where you feel it the most? rwanda. extraordinary. >> how many countries did you -- >> we had a guide, eric, who was terrific. he lost his father, his lost his two sisters, his two brothers. it's like that almost across the country. you meet so many people in that part where it really is tremendously tough. >> are they on the way back? >> they are. if i was in -- that was the one thing i was going to tell you from the investment perspective. if ingd invest money in africa, you could feel it. >> really? >> i know the horrible stories. >> nairobi you could feel -- >> how many different countries? >> we were in rwanda, tanzania and kenya.
6:04am
but kenya briefly. >> if like a week from now there's a tape worm in me that i don't know where it came from, and it's like all wrapped around my ribs and eight feet long, i might -- >> was that from that hug earlier? >> i don't know. my feet are two feet -- and they go in between your toes. i'm afraid to even -- >> are you trying to out us on the air? >> no. >> playing footsy? >> i come down with anything weird -- >> i have to take malaron. >> for malaria? >> and it makes you take crazy dreams. >> i did not take it when i went to india because there's some question as to -- >> you weren't -- you hadn't read one paragraph before you said, this is a fascinating story that i hope we get to talk about. >> we were talking about it in the makeup room? >> because it's clearly a political move? >> no. i think it's not only
6:05am
political -- >> it's incredible. >> we're talking about the private equity investigation. >> basically turning your management fee into carried interest. we've talked about -- it just seems to me that's as blatant as it gets. >> it was announced the day after the rnc closed. beautiful. somebody likes ibm, bark clays, upgrading it from overweight to equal weight. other moves from wall street analysts today, jpmorgan -- this is weird, ungrading morgan stanley. doesn't seem quite right to from overweight to neutral. target remains at 20. meantime the firm is downgrading goldman sachs from underweight to neutral but the target is not changing. it is at -- you have to read this.
6:06am
>> i am? >> you want me to stall in the target does not change. it's not 108 or 106. the target is -- >> you're doing great stalling. there's someone behind you. don't get too close, rob. >> wow. what's happening? >> welcome back. i don't have connections. democratic national convention opening in charlotte, north carolina today. parties will vote on their delegate and tonight michelle obama will be speaking and john harwood is in charlotte, joining us with a preview of all the action this morning. john? >> are you sure you're done with breaking news on joe's tape worm situation? >> i don't have one yet. if i get one, i know where it's -- andrew just got back from africa, john, which i'm sure you've been there, haven't
6:07am
you? >> caller: i have. >> you climb kilimanjaro or something or what did you do? >> i went there several times. most of the time i was covering unrest in south africa during the 1980s before mandela was released. >> you weren't in luxury tree houses with a jacuzzi in your room? >> i have been on luxury camping situations. it's pretty cool. but most was for reporting. >> good answer. >> andrew, if he gets sick at all any time in the next three months, you're going to get blamed. >> god knows what you brought back with you. >> i'm going to bring you a prescription. >> did you behave yourself over there? she was with you? >> yes. >> you were home every night? >> don't go there. >> let's go to the convention -- >> just looking at -- >> reporter: yeah, what about the convention? two headline speakers, julian
6:08am
castro, mayor of san antonio, rising star for democrats, someone they hope will help them cement and reinforce their lead among hispanic voters. michelle obama will speak. she's very popular figure. more popular than her husband. somebody who has made a big contribution to solidifying his image for values and family and things holding him up on the basis of likability and relatability while the economy is weighing him down. on wednesday you have bill clinton, who will be offering a testal to economic policies. democrats hope to surf on his credibility from his economic stewardship in the 1990s. the last night we have joe biden and president obama. president obama scheduled to speak in a football stadium. don't think he's going to have the same kind of electricity that he had four years ago but they're hoping to get close to it. >> john, there's a headline that
6:09am
some -- that the party is planning to bring out some employees of portfolio companies of bain capital that are going to be speaking at the convention. >> shocker, shocker. of course. these are people who have been featured in television advertisements. yes, they're going to do that. >> any current employees? all former employees? >> i don't know. >> do you have any expectations -- >> i doubt if there are any current employees that are going to come on and say, he shaved the economy, but i still have my job. it's awesome. >> is it dangerous to get to the point where you take on not only a company rubbingnning a busine but by association the total industry? >> caller: yes. >> reporter: yes. look, president obama has turned
6:10am
a lot of wall street figures who supported him in 2008, they're supporting mitt romney. i think that's -- that goes with the territory of the nature of the campaign they're running. they know that's going to happen. it's already happened. been happening for a couple years. they believe the benefits exceed the cost of hitting that message -- >> you know what's great, now we're all -- newspapers, are you better off now? everybody is trying to answer that question because the governor, the democratic governor answered no and then he came back and said, yes, we are better off. it's funny because the reason we're not doing as well as we should because of bush. the reason we're -- now we're parsing on what -- if we are better off is that because of bush since he was responsible for everything else? the part that are good, that's from pb. the parts that are still bad, a hangover leftrom do i have that right?
6:11am
>> caller: no, you don't. that's not an accurate description of how they talk about the economy. yes, they blame so the strategies during the bush administration but they make an argument of a much longer run of stagnation in middle class income which traces way back before bush. it's about the stagnation middle income -- >> but we're not better off. we're not even better -- we're not better off than we were 20 years ago, much less four years ago with stagnation of middle class. we're not better off. it's hard to think are you better off when you have that -- >> well, you're better off when you -- when you're gaining jobs instead of losing -- >> two people last week used that 4 million job number the president -- the obama administration created 4 million jobs. they take away the first 8 million lost in the first eight months and make the bottom exactly 14 months into his presidency.
6:12am
even though we're down still down a net four -- >> forget the 4.4. i'm just saying month by month for the last 29 or 30 months we've been adding private sector jobs. >> and then bernanke said he was -- that the fed's moves were responsible for 2 million. now i'm unclear whether the 4 million were 2 million that the fed created or who created them? >> reporter: it's not like you can put a tag on every job and say, created by ben bernanke. i don't think you would deny given the cratering of gdp in the first quarter of 200 and the hundreds of thousands of jobs we were losing in late '08, early '09, it's certainly better than that. >> oh, yeah. we go through recessions. good through boom times. periods we lose jobs. usually the country comes back and we gain jobs again. that's normally the way --
6:13am
>> reporter: this was an extraordinary recession because of the effects of housing bubble and financial crisis. >> if you have a 32-point right track/wrong track number, which is what we still have. people are saying, that doesn't feel like better off than four years ago. >> reporter: no request. nobody argues that. people are not feeling good. they're not feeling confident. what democrats and obama campaign hope is that voters have a sense have problems not just being in this moment but having accumulated over a couple decades and they repeat to globalization of the economy and increasing competition from elsewhere and difficulties that aren't about either the bush administration or the obama administration. they're longer run than that. >> i feel like you -- you seem very comfortable there down at the convention. i know you'll be -- we're going to check with you again in this show. are you on every hour? >> reporter: i think you killed
6:14am
me from 7:00 but i'm back for 8:00. i'm alive for :00. >> then we're going to stretch this one out and the 8:00 out so you get all your time, john. >> reporter: joe, i hope you're healthy by 8:00. >> i feel weird right now. i feel like something -- i don't know. scratchy and itchy, in between my toes i feel like something is crawling up in there. >> reporter: i bet andrew is feeling great. >> i feel great. one heck of a trip, john. >> head lice jumping off. >> would you stop. >> reporter: joe -- andrew, what was the -- what was your luxury experience there? >> oh, my god, this is 1% on steroids. >> gorillas in rwanda and safari in tanzania in two different places. >> reporter: my favorite place in the electric rags category in africa was a camel safari in kenya, which is awesome. you ride camels through the
6:15am
bush. >> maybe we could all take the show to africa. how about that? >> reporter: boom, "squawk" on camels! >> how many shots? >> four shots. >> only four shots? >> can you handle it? >> in your arm? >> my shoulder. deal? >> i don't know if my kid -- i don't -- >> i don't want to take the malaria -- >> thanks for joining us. >> kelly evans was here last week. >> i heard. >> she's back in london, thank god, because ross seemed more senile than clinton. he was talking to an empty chair trying to interview you. did he know you weren't there? >> he had a great banter going with -- the empty chair became more popular than i think my presence on -- >> tweeting that, it was empty chair day yesterday. people were tweeting over here crazy with the empty chairs. incredible.
6:16am
>> i know. given u.s. markets were closed, it was a quiet pert now the centerpiece of the republican talking point. i don't know what's going on with the empty chair at this point. i'm happy to move past it. john bo, i'm told that's hello -- that's swahili for hello. any case, that's for your africa report. we're not talking about africa in the global markets report but i can tell you what's happening in europe. seven to three ratios outclimbing decliners despite mario draghi yesterday seemed to indicate support for bond purchases. it could extemd not just the one and two but three-year sector as ecb and european officials move toward a political and banking union to put europe's debt crisis behind them. supporting ibex here in spain which has continued to rally all morning adding 1.4%.
6:17am
the same isn't true with the rest of the major european boards. ftse 100 down 0.7%. weak construction figures there. uk government is reshuf shuffling the cabinet here. shanghai composite, want to draw your attention to this as well. it kicked off on a negative note, down 0.75% to another fresh low. take a look at spanish curve. prices up across the board on the back of those draghi comment. that's pushed the ten-year down to 6.66%. pretty significant move in the last couple of days. more significant is what we're seeing back here in the two and three year range. two-year in particular, we've seen that move, that yield today come down about 30 basis point. it has moved back up off the lows. 2.23% is the level to watch there.
6:18am
it's giving a bit of a lift -- although currency wall. the euro/dollar was getting a lift. now barely positive. flip down to the end, that's the aussie/dollar. this is 0.1% higher despite the fact the bank of australia was worried about their outlook. but there's views they could be easing more in the months ahead. back to you. >> are you coming back any time soon? >> i was just there. >> we need you back so we actually get you on set next time. >> i think ross and i can both just come back. we could hand over to you across the desk than across the pond. >> i don't think two empty chairs, it would be just be two chairs. >> i would like having five around the table. that would be fun.
6:19am
>> we have room. >> we do have room. >> we'd have a good discussion going. >> something for us to plan. thank you, kelly we'll talk to you tomorrow. when we come back, the september/october period historically is a very difficult one for stocks. could this year break the trend? we'll tush to the charts after this but first "squawk" sports buzz. rory mcilroy winning the deutsche championship. overcame a three-shot deficit in five holes and survived in the final two holes to close with a 4 under 67. big win. how do you say this? >> oosthazen. >> he chunked a couple on the last two holes. one went straight right but he had a putt to tie. >> well, mcelroy was able to beat him by 1. >> tiger almost hit a shot, too. ?
6:20am
with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade.
6:21am
6:22am
> here to tell us where the market could be headed. back above 1400 on s&p. one of them we just barely reached and the dow was around 13,000. those two level were just above or below. which way does this reconcile itself? >> good morning. welcome back.
6:23am
joe, the bottom line f we could get my chart up here because -- god bless you -- get right to it. the last few times we. on, we displayed a trend line in the s&p. there you have it. going back to july of 2006. you see a quintet of circled areas there. and you'll notice the one on the far left goes back to the july '06 low. you'll notice the middle circle shows the recovery high before the s&p collapsed. 36% in four weeks. bottom line, look on the right side of the screen and you'll see two highs, both weekly closes in the vicinity between 1400 and 1425, which is the weekly closing area we need to rip out. if we do, this could be something possibly quite good for the bulls, trying to be -- >> to a novice it looks like --
6:24am
it looks like it's resistance if it doesn't go above it. if it does go above it, it goes support. is it more likely to turn down or go up? >> based on the work we have and the fact we've been warming to the market since early june, when we had a bullish divergence in some of our indicators, joe, to me i think the market right now is on the bullish side of neutral. if my indicators stay where they are and they could record a few closes above the 1430 area on a weekly basis, that to me could be significant. right now i'm using the 1360s to 70s. we've been warm to the market since early june. >> it's weird that -- the dollar against the euro has been weakening. gold is almost back to 1700 and oil is almost at $100. is this thing -- you're not a fundamental. >> light sweet crude oil did
6:25am
close above $93.50 and when they were able to do that, that helped. >> is this a carry trade -- >> we're not talking about a battle f i could put it in these terms, a world technical war, you might say, because this line will decide, not in total measure because we never want to rest our hat on any one indicator, joe, but that line is going to be, i believe, significant. if we stay above that line, joe, that area in the low 1400s becomes support. >> i knew that. that was my prediction. any other charts? >> i included another chart if they would like to -- >> i want to see it. this he, joe, if you -- this is a resistance. this is a monthly closing chart. i want you to get excited because this low 1400s area is really much of a technical battle as i have seen in 30 years plus. so, if you look at those three
6:26am
arrows, each arrow going back to early '07 indicates a monthly close between 1400 and 1410 on s&p 500. if we combine that, we're basically in the area now where if we could rip out this resistance and -- joe, this is -- >> that's all a big if, right? >> you want my opinion? my opinion right now is odds favor us doing it. we've warmed to the market. i would say on paper we have some positions. i would not be adverse to increase those positions. i think the risk here to the bears is that we get above these areas. >> do you wear red glasses with red ties or with blue ties? >> i bought these glasses -- >> yes or no? >> try them on.
6:27am
>> i'm not touching -- my wife told me it would match the tie. >> jared bernstein is up next.
6:28am
6:29am
a passionate belief, and the foundation on which merrill lynch has been built. today, our financial advisors lead from a new position of strength. together with bank of america, they have access to more resources than ever before. a steadfast commitment to help you achieve your financial goals in life. that's the power of the right advisor. that's merrill lynch. there's natural gas under my town. it's a game changer. ♪ it means cleaner, cheaper american-made energy. but we've got to be careful how we get it. design the wells to be safe. thousands of jobs. use the most advanced technology to protect our water. billions in the economy. at chevron, if we can't do it right, we won't do it at all. we've got to think long term. we've got to think long term.
6:30am
♪ ♪ ♪ i feel the rains down in africa ♪ >> i know what's going on. it's good. it's smart. >> you're well rested. >> i think we should bring the show to rewanda. it would be an interesting -- >> i'm worried about getting tape worm in my ear now, thanks to joe. >> you have to play beach boys.
6:31am
good morning. welcome back to "squawk box." i'm joe kernen along with becky quick and andrew ross sorkin. policy makers say past cuts yet to be felt. outlook on china uncertain. country tied to what happens in china, which we'll talk about now. speaking of china, less than bullish economic data during the country and articles and papers saying they're hesitant to stimulate now. they don't to want get back into that boom/bust cycle where they have to cool thing off so they're holding back. china's manufacturing has been badly hit by slowing orders. some people think the yuan is overvalued. that's crazy. final reading of the hsbc china manufacturing manager's
6:32am
index fell to lowest level since 2008. china's manufacturing purchase index dropped below critical expansion/contraction level since 2011. controversial book by former navy s.e.a.l. about dough man dough raid that killed osama bin laden goes on sale today. it's stormed to top of the book sales on amazon, outselling the 50 shades series. i read it. there's some crazy stuff in that book. in any event, the unauthorized book "no easy day" has caused the u.s. government to threaten legal action on the grounds of nonclo nondisclosure of government secrets. both of these folks are giving me the look. i wanted to see what's going on in popular culture. >> i have not read "50 shades of grey". >> which begs the question,
6:33am
you're out in the middle of nowhere -- >> on an airplane. >> once you got there with your wife, you're -- never mind. the combination of "50 shades of grey" and, you know, being in the great outdoors. i mean, what's the craziest thing that's happened in that book? i haven't read it. >> i can't say on air. >> worse than the tabloids? >> worse than you've heard of. >> is it well written? is the plot any good? >> not really. >> you read the wholeg? >> only parts of it. >> that's even worse. so, you only read the dirty parts? >> i read the dirty parts. come on -- >> oy! >> good morning. >> like "penthouse" letters? >> sort of like that. >> any amp tees? >> move on. >> the democratic national convention kicking off in north carolina. let's bring in jared
6:34am
bernstein -- >> he's read it for sure. >> i'll see if i can rise to the level of this conversation. >> you've read it -- >> oh, please, bernstein. you've read it for sure. you've lived it. >> i have not -- i have not read it. >> he wrote it but he didn't read it. >> i could have written it. i haven't read it yet. >> as we get into democratic national convention, the knock the democrats have been saying on republican national convention is they were short on details. that mitt romney and paul ryan didn't give enough of their plans, didn't come up with any new ideas. that raises the question, what kind of new plans can the democrats come up with this week? >> i think it's a fair creditiq of republicans. the trickle down philosophies of the goench george w. bush, deregulate, big tax cuts at the top. i think you're right. it's the job of the ds this week to differentiate themselves. they have been critical about the lack of specificity and that
6:35am
puts the burden on them to offer some. >> do you think we'll get any? what i've seen with the political conventions over the last many cycles is that they're short on details all the way around. this is the time to really rally up your base and get people excited about coming out for the campaign. you tend not to hear very specific plans at these events. >> i think that's right. i think there's a difference between a level of specificity that says here are percentages for marginal tax rate schedule and a general sense of what you plan to do that's different than what you're doing or what you plan to do to help accelerate some of the things you're doing. in the democratic case you're not going to hear details about the immentation of affordable care but i suspect you will hear, we need to be re-elected so we can finish the job implementing the law of the land, affordable care act, financial reform, measures that the other side says they'll put right on the chopping block. i think it's a level of
6:36am
generality, consistent with what you're saying, but not nearly as unspecific as rs were. i took a lot of what they said as basically we're good guys, we've had good lives, we love our families and, you know, the other guy is terrible, so vote for us. >> yeah. i think this is probably setting up that whole question that's been asked again and again, are you better off now than you were four years ago. getting into that, i guess for the democrats that's a tricky question to come up with. they want to take the attention away from that. how do they do it? >> i don't think it's that tricky and i don't think they should try to take attention away from that. people have longer memories of this than is typically the case. i'm not sure why but if you look at the polling, it's quite clear they remember the george w. bush economy. four years ago was 2008. i was there. i was in the white house. i remember getting there in january with the economy cratering 9% decline in gdp.
6:37am
i've never seen anything like it. 2.1 million jobs lost in the first quarter. i won't rehearse statisticics of the turn-around. someone was on -- i think it was john harwood who was doing that. that's nothing to run away from. >> if friday we're above 8%, what is that, 43 months. never been like that. weakest recovery by a long shot in any of the -- >> i think that's -- you know what i wanted to ask you, because obama care is still -- it's still unpopular. i was wondering how much we really do hear about that. i know you said the rs were talking about the other guys being bad. you're going to parade out employees from bain, and it's going to be mostly -- this is going to be mostly about romney. how many times do you think obama care is going to be brought up? do you think it will brought up or something they want to forget? >> i'll tell you what addition that's a good question. let me tell you what i think is going to happen. i don't think you'll hear a lot
6:38am
about boem care, affordable care act. you'll hear about the parts people do like. this is a distinction with with republica republicans. the medicare hospital insurance trust fund -- you won't hear this level of detail -- would last eight years more than would be the case. by some of the cancellations of things, some repeals of the rs want to do, that aelt years goes away. the affordable care act extends the life of medicare by eight years, which is true. you'll hear it's offering benefits to seniors, lower prescription drug costs and wellness visits, which is true. the parts about kids that get to stay on their parents' insurance, which is true. when you get down toe that level, people actually very much like what they're hearing. >> slackers. >> i want to ask, roger altman
6:39am
has a piece in today's ft where he lays out that we could be in for a better than expected recovery no matter who gets elected. he says the famine we've seen could be followed by a feast. you could see better than expected housing recovery and that could spur all kind of growth, spur us back against 2.5%. do you agree with that premise? >> i hope he's right about that. i think that premise is partly true. what's happening now are very important corrections are almost completed. the housing market seems to have carved out a bottom. i think that's huge. i think it will support growth rates above trend. if you take trend to be around 2%, 2.5%. are we talking about 3% or 4%? i'm closer to the 3 than -- >> we'll take any of that right now. >> that would be good. to get above trend would be helpful for this economy. >> in terms of the convention, how much is going to be an attack on, for example, ryan and romney relative to a hope-filled
6:40am
convention that we saw four years ago? >> i guess i would split it by around half and half. if it's a lot more attack than hope, i think that would be a mistake. i don't mean hope. i actually mean more concrete ideas we're missing from republican side. in terms of romney/ryan, the distinction between trickle down, deregulatory agenda, you'll hear a ton of that. frankly you should because it's correct. i also think you'll hear a lot of corrections of out and out falsehoods amplified on republicans. i think it's fair for democrats to come back with that. >> all right. jared, your old boss has read that 50 -- you want to put people in chains. that reminds me of "50 shade of grey" and channelling -- >> i would know if i read it. >> putting people in chains. isn't that what it's about? or handcuffs? >> andrew --
6:41am
>> was it a rope? >> i read in "the post" they were selling rope. >> they were selling rope. so it's not chains? >> other stuff we can't talk about. >> jared is going to run out and pick that thing up immediately, right? >> no. i'll go back to reading "cane's general theory". >> well, you live it. >> that's what gets me excited. >> oh, man. all right. thanks, jared. comment, questions about anything you see here on "squawk," e-mail us at squa squawk @cnbc. citigroup's mark mahney will tell us about the good, bad and ugly. he'll make our day in that space. tiger, you might have seen, finished third at deutsche bank championship and that makes him the first $100 million man on the pga tour.
6:42am
sam snooed sam snead is the career leader. snead earned $620,000 in that entire career. this $100 million for tiger understates he's going to be a billion dollar athlete with endorsements and everything else. $100 million just in winnings in a career that started -- it's the "squawk box" nfl kickoff. and the league is well represented. jets owner woody johnson, cowboys' owner jerry jones and new york giants chairman steve tyche. they'll go head to head tomorrow on "squawk box." that puts us in control. our abundant natural gas is already saving us money, producing cleaner electricity, putting us to work here in america and supporting wind and solar. though all energy development comes with some risk, we're committed to safely and responsibly
6:43am
producing natural gas. it's not a dream. america's natural gas... putting us in control of our energy future, now. tdd#: 1-800-345-2550 hours can go by before i realize tdd#: 1-800-345-2550 that i haven't even looked away from my screen. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 that kind of focus... tdd#: 1-800-345-2550 that's what i have when i trade. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 ...helps me keep an eye on what's really important to me. tdd#: 1-800-345-2550 it's packed with tools that help me work my strategies, tdd#: 1-800-345-2550 spot patterns and find opportunities more easily. tdd#: 1-800-345-2550 then, when i'm ready... act decisively. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 with the exact same tools, the exact same way. tdd#: 1-800-345-2550 and the reality is, with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime... tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 ...until i choose to focus on something else. tdd#: 1-800-345-2550 trade at schwab for $8.95 a trade. tdd#: 1-800-345-2550 open an account and trade
6:44am
tdd#: 1-800-345-2550 up to 6 months commission-free online equity trading tdd#: 1-800-345-2550 with a $50,000 deposit. tdd#: 1-800-345-2550 call 1-866-516-0492 tdd#: 1-800-345-2550 and a trading specialist tdd#: 1-800-345-2550 will help you get started today.
6:45am
6:46am
citi group's annual conference again hosting the biggest companies in the business. what are the big themes you're expecting to be talking about this morning? >> there are three questions you'll hear. you have the leading consumer internet companies, amazon, google, priceline. how is the consumer faring right now? one company will spend more cash, spending it back to the consumers. the biggest thesis is mobile. now it seems like investor sentiment is starting to turn. >> amazon will obviously be a big issue. what's the sense in terms of when investors will see a big return, see the margins expand? >> i think they will over time. this company for eight years, 2003 to 2010, consistently did 6% operating margins.
6:47am
didn't feel consistent at the time but if you look back, it was. they're 2% now. they've clearly shown the ability to bring up margins. they'll do it again as they get through investment cycles, like new kindles, new distribution centers, amazon websters. they're doing the right thing. we'll see gradual margin expansion beginning next year. >> how much of the conversation will be about apple? i think it's next week we'll hear about the iphone. >> and this week a couple new tablets, probably a kindle fire 2. that's the overhang on google. it's an overhang maybe on facebook. it's an overhang on amazon, too. >> do you have any words of wisdom for mr. zuckerberg? >> no. for investors we're not buyers here. >> where are you a buyer? >> two things -- three thins. we want to see lock up expirations roll off. we need to see reacceleration and you need mobile to hit. you need something in the
6:48am
mid-teens, something obvious as a discount to growth rate. >> 15 bucks? >> yes. i wrote a column about cfo of facebook, david ebersman. they lost $50 billion of market cap. that's a huge number. that's more than -- we could name millions of companies but $50 billion in 90 days. >> let me put context around this. almost every internet ipo over the last 18 months has traded off materially from ipo price into its lock up expiration. what you're seeing out of facebook is not surprising given what you've seen with other stocks. most of them came out with very high valuations because there was enormous public interest in the names. look at the interest in facebook at the time. it's hard to price something like that. >> is it because of the internet? i mean, should we look at all internet ipos scance bought investors can get in before it
6:49am
comes to an ipo? >> possibly those second -- for all the second tier markets that bid up the stocks a little bit. maybe that's an issue. look, the question is, do are there good business models that came through this? we think so. we liked linkdin since the lock up. zilo, yelp. >> do you think it creates operational problems ultimately in terms of being able to retain and attract new talent? i say that recognizing i think most of the restricted stock units at facebook, if you started any time after basically 2010 are over $24 and now we're to $18. if you say you won't buy until it's $14, what does it say for those who are there and those they want to bring in? >> it's good to be very disruptive, distractive as an event for employees there. i've had meetings at facebook recently. they say it's not a distraction. i find it hard to believe
6:50am
employees aren't looking at values of their shares every day. that's a very hard thing to manage. you try to have employees -- >> if you get unhappy with that situation as a facebook employee, who's the hot company you want to jump to? the hot co to jump to? >> it's hard to know. >> you fluffed off the 50 billion that easily, the other internet ipos came out -- you could take every other ipo, add up their 50% decline and multiply by a thousand and that doesn't equal $50 billion. it was fundamentally different. what is the next biggest internet ipo that came out? >> linkedin. >> how much did that raise? >> we were doing $5 billion to $10 billion. >> $50 billion, to lose that, that could be the defining moment of the social networking age, don't you think? >> it is until -- >> and not in a good way. >> it is until lockup
6:51am
expirations expire and they prove global moderation. usage has moved toward global devices and it's hard to monetize. we didn't have a position until 40 days after and had a hold on it ever since. >> a question relates to the samsung/apple case. you'll see lots of different devices, how much do you think may or may not be forced to change because of this lawsuit? >> i'm sure there will be tweaks all among the system. i'm skeptical. >> what are you holding? >> the simple kindle. >> in terms of how much change has to come to, irrelevant? >> my guess is these are tweaks. i'd be surprised if you have to fundamentally change the kindle fire and google nexus 7, the other tablets. i don't think you'll see that. the smartphones maybe bigger
6:52am
changes. i doubt it. >> i think how much pain that is to spread around. zuckerberg lost a lot and the guys that owned big amounts lost a lot but a lot of average people lost a lot. it reminds me of aol time warner, i can't remember how much value destruction in one foul swoop. >> biggest we've seen in the internet space unless you want to think about the correction in the yahoo! shares post microsoft bids. >> that wasn't $50 billion. >> $50 billion is a lot of money. mark, thank you for coming in. good luck with the conference. >> some of the early guys are sitting on some of the 50 that got out. it sold on the ipo, they got the 50. >> they got the 50. got a lot of e-mails around the column saying by the way the company made off like a bandit because they got the cash. >> i want more outrage from you on this. >> we'll do it over the next
6:53am
hour. when we come back, an ecb meeting, jobs report and political convention. mark rand will join us after this. you know why i sell tools? tools are uncomplicated. nothing complicated about a pair of 10 inch hose clamp pliers. you know what's complicated? shipping. shipping's complicated. not really. with priority mail flat rate boxes from the postal service shipping's easy. if it fits, it ships anywhere in the country for a low flat rate. that's not complicated. no. come on. how about... a handshake. alright. priority mail flat rate boxes. starting at just $5.15. only from the postal service.
6:54am
6:55am
multi-policy discount. paperless discount. paid-in-full discount. [yawning] homeowner's discount. safe driver discount. chipmunk family reunion. someone stole the nuts. squirrel jail.
6:56am
justice! countless discounts. now that's progressive. call or click today. when we return the new york attorney general is investigating whether some private equity firms abused a tax strategy. we'll ask if this is political theater or something more, right after this.
6:57am
6:58am
at merrill lynch, we understand the importance of your goals. today, our financial advisors lead from a new position of strength. together with bank of america, they have access to more resources than ever before. a steadfast commitment to help you achieve your financial goals in life. that's the power of the right advisor. that's merrill lynch.
6:59am
7:00am
the dnc kicking off president obama's re-election bid. >> i believed in you. i bet on you. i'll make that bet any day of the week. >> former pennsylvania governor ed rendell weighs in on what his party needs to do to gain voters that are on the fence. it's a social distortion. >> isn't that right, warren? i said you got -- >> oh! >> if you're thinking of using the latest craze to expand business growth, think again. why social media is all full. >> the market's in focus. >> sell for the 142! >> we are keeping alose watch on the latest in europe and what's at stake for
7:01am
business. it's the second hour of "squawk box" and it starts right now. ♪ and i'll be taking care of business every day ♪ ♪ taking care of business every way ♪ ♪ i be taking care of business ♪ it's all right good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. let answer get to your morning headlines. we've been keeping an eye on the futures and after a big rally on friday the futures are just below fair value, dow futures down by 7.8, s&p futures just below as well. this is a shortened week and begins about a multibillion-dollar takeover deal in the pharmaceutical industry. valeant is buys medicis for $2.6 billion. edmonds.com expect auto sales to be up a little more than 20%
7:02am
than a year ago and ecb president mario draghi says if the ecb were to make purchases of short term sovereign bonds this would not violate eu rules. draghi is expected to detail a new bond buying plan later this week and that's what the market will be eyeing closely. new york attorney general eric schneiderman is probing whether companies used loopholes to avoid paying taxes. >> more than a dozen of the private equity's largest firms, kkr, silver lake partners, tpg and providence equity were subpoenas in early july by the new york state ag eric schneider one, the matter a tax loophole that allows the firms to pay a lower tax rate by manages investors money. it's called a management fee, the only guaranteed income for the firm and ranges from 1% to
7:03am
3% based on the fund's size. the other way is by selling or exiting businesses they've bought and the profit they make doing that, is taxed as a capital gain at 15%, not as ordinary income taxed at 35%. by reinvesting the management fee or steady income stream into a fund firms pay the lower rate rather than the higher one and ag schneiderman is investigating whether the state was cheated out of hundreds of millions in tax dollars. this isn't the first inquiry nor is the issue limited to private equity. many venture capital firms and hedge funds reinvest fees in a similar way and big banks are known to reinvest into assets like treasuries. the irs opened a similar study about five years ago and that ended with no charges but now that many of these firms have gone public there's more disclosure around the fees and what they're making in, we should note blackstone and the
7:04am
carlile group have never done this. there are two other issues, the ramping up of schneiderman's office. libor, the energy drink industry and now private equity and also an issue for president obama. his budget proposals since he entered office sought to tax carried interest like any other income and 2013 is the supposedly the first year it goes into effect. lot of prepared to get taxed at 35% but as of yet it hasn't made it through the pipeline. >> kayla, any sense on what inspired this investigation, given the earlier investigation you talked about, the irs opening and then closing? >> andrew, i think it's definitely an issue where the timing is suspect and everyone i've talked to the big question has been why now? some of the idea is that with the big document dump over at
7:05am
gawker with the documents concerned bain capital the reporters on the requests new york times" were on the hunt and the idea they were reinvesting some of the management fee into the funds. that was what initially brought it back to reporters' attention and the ag obviously had already been looking into it but i think the other issue is the fact the new tax goes into effect at the beginning of 2013 so if there's any way to strike while the iron is hot before the changes go into effect then you got a short few month period. >> i could be wrong on this, didn't the subpoenas come before the document dump, if you will, on gawker around bain? >> i think so, because my intel is that the subpoenas came in early july and the document dump happened a couple weeks ago. regardless of how long gawker had the documents it's probably a difference of a few weeks but it is my understanding the subpoenas were sent out before that, but that as far as wanting to make it a more public issue,
7:06am
that's what might have spurred this. >> kayla, thanks so much. we constantly debate this topic around the table. why don't you take the management fee, pay the taxes because it is a fee and if you want to invest in the fund, invest in the fund and you'll pay capital gains but the idea of revolve it doesn't seem right. >> mitt romney's people pointed out he did not participate in this at bain, they don't think there's anything wrong with this practice but it's not something he ever actually was involved with. >> right. i'm surprised not that he didn't participate it but that he's been so adam ant that there's nothing wrong with it. >> if it's against the law they wouldn't be able to do it. >> the thing about tax law it's not against the law until they decide it's against the law. >> the irs five years ago looked into it, it wasn't but some tax attorneys think it is very aggressive or in some cases illegal. >> saying that your duty as a
7:07am
citizen to, you don't want to ever evade taxes but you want to avoid them. let's talk about some other global market news in morning, australia's central bank holding interest rates unchanged at 3.5% for a third straight months. past cuts have yet to be fully felt. the central bank is admitting to the uncertainty for the outlook for china, and speaking of china some less than bullish economic numbers out of the country during the last several days. two surveys showing the manufacturing sector was badly hit by slowing new orders. final reading of the purchasing managing index fell to its lowest level since march of 2009 and china's official purchasing manufacturing index dropped below the contraction level of 50 for the first time since november of 2011. back to work. right now. back to work. >> and back to school. >> and back to school. >> not everybody starts today.
7:08am
your little shavers, are they going to -- >> they start a program starting next week. >> next week. >> kimmy and natalie go back tomorrow. >> this has become a ritual as i suck up to the current teachers and my daughter starts tomorrow and my son scott starts today and mrs. nassau is a wonderful, wonderful person who works for a wonderful principal named dr. jason, and there's another one, mr. spelker, how much can i get in? [ kissing ] we can't buy stocks, but i can suck up to the public school. so you'll be doing this someday. >> i'll start next tuesday. >> it's not beneath you? >> absolutely not. >> to do something like that. >> we'll be talking a lot of teachers names on the air. >> good luck. i think he's watching. >> way to go, scotty.
7:09am
up next, former pennsylvania governor ed rendell is live from the dnc. as we mentioned, september is here, it's time to get back to business, time to get back to school. we'll talk about what you need to watch this week, including a big ecb meeting. mark grant of southwest securities joins us in a moment. stay right here. "squawk" will be right back. comments? questions? send them to @squawkcnbc on twitter. follow the show and look for updates from andrew, becky, joe and the "squawk" staff. "squawk box" on cnbc and on twitter. you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying...
7:10am
all ] i'm with scottrade.
7:11am
7:12am
the democratic national convention kicks off today in charlotte, north carolina. former governor ed rendell, also an msnbc political analyst. are you on the docket, ed? i would have you. >> no, since i work for nbc i don't think i can speak anymore at the democratic convention. >> that doesn't stop our nbc people from being big dems most of the time, ed. i could get in trouble for that. you're the least of our worries, you're probably more objective than most. >> well no question about that. >> no question. >> i'm speaking at a few state delegations. >> i think that's a missed opportunity. you gave -- andrew got back and watched clint.
7:13am
you say clint was a big mistake, embarrassing. he had three days of teleprompter reading by some mid level congresspeople. that was ten minutes. he's not on the ticket. he's an icon. i've seen both sides. your side particularly didn't like it, but a lot of people just, peggy noonan said it was endearing and fun to watch, it was riveting and gave a lot of red meat to people in the hall. >> i don't think anybody's going to vote against governor romney because of what clint east wad did. can you imagine a sitting republican president and we put a hollywood star on and he said inferentially the language that the president was supposed to be using, there would have been cries of treason, treason, but leaving that aside i don't think anybody will vote against governor romney because of clint east wad. what hurt they missed an opportunity instead of that ten minutes to put that great ten-minute video on, what they
7:14am
should have done is have marco rubio speak, introduce the video, have the video on action lights come up, governor romney do their speech. they missed that opportunity. >> i think mostly that only true believers were watching that and only true believers are really going to be watching for the next three days. you're almost preaching to the choir a lot of times. there's some independents i guess, you got to try to reach them, right? >> there are a few that watch, no question. independents who really care about their vote and they do want to hear, they want to hear the convention acceptance speeches and want to hear the three debates. those are the keys for the independents who are undecided and there are not many, 7%, 8%, but in many states that 7%, 8% is the ball game. >> you make some, you're always, you can always like i say you talk me into things whenever you're on. it's not about big government or
7:15am
limited government. it's about effective government and i think you're right, that's the line, the fine line that democrats need to walk, though, because that's really how this election is being framed, whether we want a lot more government involvement in our lives or whether we want a stronger return to more private sector stuff. lot of people think effective government is an oxymoron, governor. >> except the first night of the republican convention i thought it was very curious. ann romney talked about the john and abigail adams scholarship program governor romney started in massachusetts. that was 100% government money that went to young, deserving kids in underperforming schools so they could go to college, and chris christie talked about the g.i. bill and what it did for his father. the tea partyites signed saying keep your hands off of my medicare. it works.
7:16am
it's a government program, the administrative costs are a fourth of what most private health insurance companies charge. when government does things in an effective targeted way it's a plus for people and helps people. what we have to find out once the smoke clears is what are the programs that government can do to stimulate growth, that are effective, cost-effective and really hit the target. that's what we've got to concentrate on. you don't want no government. believe me when the towers were hit, the people in those towers didn't want no government. >> right. >> they wanted the best and the most ems workers, policemen and firemen. >> you know, what you were just talking about with medicare, if we were to look at almost any industry you could hold down administrative costs in just about any industry by making a government run. that doesn't take care -- that doesn't answer the question about fraud and inefficiencies and just the waste that you basically think of when you think of government. so you could make that same
7:17am
argument almost what really shouldn't be government run, since it could be much easier to hold down administrative costs? you wonder about innovation and everything else the private sector brings through competition. >> look, guys, you know me, i'm not saying everything should be government run. when government runs a program it can be cost effective. >> i don't know whether you -- you really say medicare is cost effective, governor? other than the administrative costs? >> when you compare it to health care costs in general i think it does a very good job in holding costs down. now, the health care system is in itself out of control, we know that. we pay for visits. we don't pay for performance. we've got a totally restructure our health care system, there's no question. but no, i think medicare does an awfully good job which is why it's got the support of the people in the tea party, for example. people don't want medicare trucked with.
7:18am
>> governor rendell when you look at the situation with medicare there's something that has to be done. we are spending that money faster than we can bring it in. >> of course. >> there is a massive overhaul that needs to be made. >> absolutely, of course. i mean, becky, the sheer fact of what we democrats have to get across to our constituents in a courageous way is when medicare was passed in the law in '65, the average life expectancy was 68, 69 years of age. today it's in the mid 80s. medicare was never meant to cover 20 years of life. >> governor, the one other thing, i do feel this a little bit, i wonder if you do, and you say you're not sure who is going to win the election, but compared to four years ago "the journal" makes a point, this really is kind of a grind to victory that the obama administration is trying to orchestrate, you know, obviously got to expand the gender gap with women and minorities but it's not going to be just a rousing endorsement by a united
7:19am
country to go forward. do you feel that it's a lot different than the hope and change from four years ago? >> sure, there's no question about it. and look, president obama in fairness to him, inherited the worst set of problems that any president did since roosevelt, there's no question about that. has he made things perfect? no. he'd be the first person to say that. >> how about that. >> almost every condition of the country is doing better, stock market almost doubled, creating jobs, not losing jobs at the rate of 750,000 a month, the auto industry which was on the brink of extinction is healthy again, and leading the world. our financial system which was near collapse is now robust again, so i think by almost any measure, things are better but you're absolutely right, there's not that same almost etherial
7:20am
feeling that we had in denver here in charlotte. the feel is you characterized it very well we are going to have to grind it out. it's going to be a tough battle in the trenches. there will be no soaring flight to victory. >> governor, enjoy yourself. i think it's a big mistake to not have you talk. anyway, we appreciate your time. >> thanks, joe. >> see you later. >> i'll pass it on. >> please do. >> i'll pass it on to mr. axelrod. >> do. >> i'm sure he considers you and becky, your opinion very highly. >> as we do his. coming up, mark grant of southwest securities on europe.
7:21am
7:22am
a passionate belief, and the foundation on which merrill lynch has been built. today, our financial advisors lead from a new position of strength. together with bank of america, they have access to more resources than ever before. a steadfast commitment to help you achieve your financial goals in life. that's the power of the right advisor. that's merrill lynch.
7:23am
welcome back. the european central bank will meet later this week with many expecting ecb president mario draghi starting a major buying back program. managing director of southwest securities mark grant is here with us. >> it's my pleasure to be with you. >> if the ecb was to buy bonds, the sovereign bonds it would not be violating what it's allowed to do and that had people thinking for sure that's what we'd be getting. if that is the case what do you think the market's reaction to it is?
7:24am
>> i think it depends very much on what the actual plan is. there was a leak from the european parliament when he spoke yesterday, several leaks actually that indicated he was talking about buying bonds zero to three years and the question, is it going to be a give in the secondary market which the germans don't want, or is it going to be in the primary market, funding directly the nations of europe that are troubled which is going to cause a problem because it seems to be a violation of the masra treaty. it will be interesting to see what the actual plan is. >> i suppose the devil is in the details. i know that you have been very bearish for a long time about what the outcome might be here. how much do you think is riding on what he says on thursday? >> i think it's going to come out before thursday. he's going to release his plan to the european central banks today. i expect that's going to be leaked, so i think we're going to have a heads up probably after the european close today, just what he intends to do.
7:25am
yes, you have the troubled nations, you have portugal, italy, spain, greece and so forth all lined up in one corner and then you have the funding nations and the nations with capital, which would be germany, austria, finland, the netherlands lined up in the other corner and i think it's going to be a very bloody battle on who gets what capital and what form and how much. i think it's going to be, cause a lot of tension in europe and i am bearish because of it. >> do you think there's any way they can actually thread the needle? >> they can thread the needle in some fashion, i suppose, but i think that germany is staunchly opposed to this. certainly the head of the bundes bank of germany has come out against it. the economy minister has come out against the plan of the ecb funding the troubled nations and the question of conditionality,
7:26am
which is how much and in what form are the nations going to have to apply for the aid and they come in for audits, for instance, in spain, which deals in dynamic provisioning, they could come in with an audit and find out that the numbers weren't at all what anyone suspects they are and that could also be a major problem. >> but let me get this straight, though, do you think that this week is where we finally get some sort of an idea of what's happening, because it seemed like we've been read itting water for the last three or four weeks at least. >> yes, i agree with you, we've been treading water and yes, i think we're going to get some actual details, we're going to see draghi's plan and then we're going to see the reaction of both spain, greece and so forth, and then the reaction of germany and austria, and how they're going to resolve this to reach some kind of compromise is anybody's guess but i think that everybody's backs are going to be up. i think teeth are going to be bared and i think it's going to be a battle.
7:27am
>> that is something to watch and mark, you've been keeping close track of it and keeping us appraised. we appreciate your time and will talk to you again soon. >> thank you so much, have a great morning. >> if you have any comments or questions about anything we've been talking about, e-mail us @squawkcnbc.com. donald trump is weighing innen othe democratic convention. and what do you get when you cross a bulldog with a shihzhu? apparently it has something to do with social media. i can't believe i got this tease. become bx will tdd#: 1-800-345-2550 you should've seen me today.
7:28am
tdd#: 1-800-345-2550 when the spx crossed above its 50 day moving average, tdd#: 1-800-345-2550 i saw the trend. tdd#: 1-800-345-2550 it looked really strong. tdd#: 1-800-345-2550 and i jumped right on it. tdd#: 1-800-345-2550 since i've switched to charles schwab... tdd#: 1-800-345-2550 ...i've been finding opportunities like this tdd#: 1-800-345-2550 a lot more easily. tdd#: 1-800-345-2550 like today, tdd#: 1-800-345-2550 i was using their streetsmart edge trading platform tdd#: 1-800-345-2550 and i saw a double bottom form. tdd#: 1-800-345-2550 so i called one of their trading specialists tdd#: 1-800-345-2550 and i bounced a few ideas off of him. tdd#: 1-800-345-2550 they're always there for me. tdd#: 1-800-345-2550 and i've got tools that let me customize my charts tdd#: 1-800-345-2550 and search for patterns as they happen. tdd#: 1-800-345-2550 plus webinars, live workshops, research. tdd#: 1-800-345-2550 whatever i need. tdd#: 1-800-345-2550 so when that double bottom showed up, tdd#: 1-800-345-2550 i was ready to make my move. tdd#: 1-800-345-2550 all for $8.95 a trade. tdd#: 1-800-345-2550 can you believe it? tdd#: 1-800-345-2550 i love it when you talk chart patterns. tdd#: 1-800-345-2550 open an account and trade up to 6 months commission free tdd#: 1-800-345-2550 online equity trading with a $50,000 deposit. tdd#: 1-800-345-2550 call 1-800-790-3807 tdd#: 1-800-345-2550 and a trading specialist will
7:29am
tdd#: 1-800-345-2550 help you get started today.
7:30am
. welcome back to "squawk box." i'm andrew ross sorkin. gulf oil production slowly building back to normal after being cut drastically by hurricane isaac. at the height of the storm 1.3 million barrels of day production was suspended. as of late yesterday that was down to 800,000 barrels with another update to come in a few hours. toys "r" us is wavi waiving
7:31am
and purchasing requirements for layaway. and sony debuts its tablet into the u.s. market this week. the tablet goes on sale friday with a 16 gigabyte model going for $399 and that's more than what google is charging the nexus and amazon charging with its kindle. lot of questions about all of that. let's talk politics and business with donald trump, the chairman and president of the trump organization, he joins us as he does every week on the "squawk" news line. good morning to you. >> good morning. >> before we talk about politics, i'd like to ask you about a story that is in the record this morning. it's got a story at the top of the page how $1 million foreclosures are on the rise. i know this is a local story but can you weigh in how you think
7:32am
things are being affected? they say million-dollar and million-dollar plus foreclosures are on the rise. >> i can see it. people are not doing well. the economy is not doing well. the banks are heavily regulated and being demanded, they're not able to make deals, and frankly, you know, the banks have not behaved very well because they haven't been loaning out money but the regulation is so stringent and so tough that it makes it very hard to get the economy going and you can't get the economy going unless the banks are going to get going. >> what do you think about the housing market overall, just because we've talked in the past about this and you've had the sense and other people we've talked to, have, too, that maybe housing is finally starting to turn and i just wonder what the foreclosures mean to that part of the process? >> except in places like miami or manhattan in new york which is phenomenal or a couple of other places it's been terrible and the housing market continues to be table. people are not able to get financing to buy a house and that's a situation that has to be taken care of, whether it's
7:33am
overregulation or the banks not behaving, people are unable to get financing and even if they have great credit ratings they have to put up 50%. in the old days you had a good credit rating, you get a good loan. they're putting up so much money and so much equity. this is a great time and i've been saying it for a while for the most part a great time to buy a house, a great time. >> if you can afford it. we could see a bumpy road from here. that's a great point what you're saying about how people can't get loans. you say it's the banks, it's regulation. how do we turn the corner with this? >> well i think you have to ease up a little bit. on occasion a bank is going to make a bad loan and the regul e regulators are putting pressure on the banks and a lot of the bankers i deal with, i have wonderful banks i deal with, they tell me it's so difficult nowadays doing base because every single deal is competent questioned and goes through so much jute know and it's not free market anymore, really not free
7:34am
market and until you get back to a society where the banks are allowed to loan money to people to buy houses, good people, with good credit ratings, in good property, you're not going to have much of a housing rebound but it's still i believe at the low and this is a great time for people to buy houses especially if they buy them directly from a bank, where you will get financing. >> we may not even -- is it really at bank america, is that where it is down there, the dnc? do you think that they can go three days without saying that's the name of the place? >> well i think when they figured out that they're in the bank of america hall where i've been many times doing speeches and other things, when they find out it's bank of america, it really must have been a shock to them. in is the way our country is done, we do something and find out it has consequences. >> welcome to bank of america! you won't hear that.
7:35am
>> of course you won't. i think obama cannot win because of a couple of things he did, obviously, but he cannot win north carolina. i don't think he's going to win north carolina. the purpose of this was to win north carolina, and it looks now like they're not going to do it. >> the classic thing suspect most famous north carolina politician of recent years there was a vp candidate, just a couple years ago, i don't think, they won't say the word john, much less john edwards. he's not going to be there. >> i was never a fan of john edwards. i'd look at him and say man, this guy, i don't get it. he's getting away with a lot and it turned out he wasn't so good. he's not going to be mentioned. he won't be prominent, he will not be speaking. >> even with david axelrod, the last guy he was attached to. he was in his campaign. >> i have a question for donald.
7:36am
related to the conventions and donald i was out all last week on another continent. i might have missed this. >> very good. i heard you were. >> there was a schedule change that didn't allow for your big surprise at the convention to happen. i was wondering if you could tell us what it actually was now. >> well we did a video, i won't go too much into it but we did an amazing video and we were going to play it the night of the hurricane, but there was no night of the hurricane. people were thinking about other things, which by the way the hurricane sort of passed. it was a bad storm, but it didn't have a huge impact on tampa, and the meteorologists got it wrong, but the night of the hurricane, we were doing a tremendous video, it was all shot and going to be great, but it really worked at the beginning. it wouldn't have worked as well during the middle or the end. >> you can send us the video? what is it? >> maybe i will. i don't know. let's call them and find out. i wouldn't mind but it was really terrific. i better not get into it more
7:37am
than that. i think it would have had a huge impact if you want to know the truth. frankly i thought the convention was good but it could have been a lot tougher. ann romney was fantastic. i thought mitt did a really good job but really could have been tougher on obama. >> where are you on clint? i maybe oddly thought it was somewhat endearing. i saw it on youtube after the fact. >> clint is a friend of mine. i thought he was great. i know he's been killed, dels mated by certain people in the media, being foolish and much worse than that. i thought clint was interesting. i thought he was great, and at first i said what's going on here. it all sort of worked and he did a terrific job and let me tell you something, he has an impact. clint eastwood has an impact. i actually called him on friday. i said "you did a great job, great job." >> what did he say, donald? >> he told him he said a great job. >> not much response. he got decimated. >> from the liberals in
7:38am
hollywood. >> the press can be very unfair. i thought unfair what they did to him. he did a good job, it was totally different, and you know in the meantime everyone is talking about it. they're not talking about anything else, they're talking about clint. >> him and john voigt. if you had sean penn or alec baldwin talk at the dnc. >> you could see george clooney the surprise guest. >> they already got the women's vote, they already got the gender -- >> on clint, though, i thought he was very unfairly treated and he really had some amazing lines. he had some great lines. they never gave him a chance. >> exactly. >> donald, how much of the democratic national convention will you watch this week? >> i'll watch a lot of it. i find it very interesting. i do love politics, i always love politics. i've been involved in it for so long and i certainly will be watching and i think they'll be effective. they will be far more vicious
7:39am
than the republicans were. i think they will be so much more vicious. you watch. >> yep. do you think they'll talk about obama care a lot, donald? >> yeah, they probably will. >> you do? it's not a winning -- >> what a wonderful thing it is, they won't be talking about what it's doing to destroy american business. they'll be talking about -- they'll give their views. i think they'll be talking about it but i think they'll be talking a lot of bad about the republicans and about mitt romney. i think there wiy will be a lot tougher than the republicans were. i don't think the republicans were tough at all at their conventi convention. i think clint was one of the tougher ones and maybe that's why he was so strongly criticized. >> all right. >> you know, if it comes down to it, what do you think the most important issue is going to be after we hear from the democrats? we heard from the republicans last week. we have a jobs report coming up on friday. >> it will be about jobs, it will be about the economy, it
7:40am
will be about gasoline prices, oil prices and if the gasoline prices continue to go up, that's going to be a real negative for them. i can't believe they haven't told opec give us a few more months but opec can't wait, they're so greedy they keep going and they don't care. they're dying to have obama get in but they can't wait that extra 70 days, so it will be very interesting, but you know, ultimately, folks, it's going to be about the economy and jobs. i really think it's a very close election, and depending on how we're doing, if he gets good reports coming out, he's going to have a real good shot and if he gets bad reports mitt will be the next president. it will be a very close race, dependent on jobs and the economy. >> donald thank you for joining us. >> thank you. bye. coming up, social media debunked, is it really helping your business or hurting it? we'll speak to an author who says having all of the friends and followers in the world may
7:41am
not be the best thing for you, next. tomorrow on "squawk box," the democrats energizing their base, we've got a big line-up to talk about business, labor, and politics, at the dnc convention. bill richardson, andy stern, congressman chris van hollen, and a lot more. plus, an exclusive with pepsi chairman and ceo indra nnoyi. don't miss "squawk" tomorrow at 6:00 a.m. eastern. you know why i sell tools? tools are uncomplicated. nothing complicated about a pair of 10 inch hose clamp pliers.
7:42am
you know what's complicated? shipping. shipping's complicated. not really. with priority mail flat rate boxes from the postal service shipping's easy. if it fits, it ships anywhere in the country for a low flat rate. that's not complicated. no. come on. how about... a handshake. alright. priority mail flat rate boxes. starting at just $5.15. only from the postal service. we're sitting on a bunch of shale gas. there's natural gas under my town. it's a game changer. ♪
7:43am
it means cleaner, cheaper american-made energy. but we've got to be careful how we get it. design the wells to be safe. thousands of jobs. use the most advanced technology to protect our water. billions in the economy. at chevron, if we can't do it right, we won't do it at all. we've got to think long term. we've got to think long term. ♪
7:44am
is social media useful for small businesses? our next guest says emphatically no, actually more than that. he's the author of "social media is bull --" >> it's cable, it could be worse. >> notice we blocked out the word. >> i saw that, i am so disappointed. >> so you can say it. >> "social media is bull --" and you know the rest. >> the title says it all. >> it does say it all. >> 99% of the time people say
7:45am
social media they mean the internet and there's the 1% that's created by marketers just at the time the american economy created it and they're like i can get rich off of this, all of these people that are unemployed, what can i do? i know, repackage and resell what the internet already knows to people who don't know any better aenmake a profit. >> small businesses are jumping into twitter, facebook, different social media platforms in hopes of increasing their business. they say they're not going to increase their business? >> not at all. i was at a beautiful arts and crafts festival, talking to a couple of people who websites, most americans don't know how to operate their domain name and hosting service and so you've got the marketers preying on that, that they don't know any bett better, small businesses out of all that money with nothing to show for it. >> they have created an
7:46am
environment, a market if you will, ebay and others for small businesses to actually shine and that the way they ultimately get people to click through and actually buy their products is through social media. joe was seeing it going on twitter and talking about it. >> different for you guys because you're on tv. this is the little secret to the internet. the internet is great if you're rich. if you're famous, people know who you are, you can do whatever you want with the internet but if you're a guy like me who tried the platforms and failed horribly it's useful. >> you're not talking about the internet in general, you're talking about the social media aspect of it in. >> mostly the internet. the problem is that the market has come out and said you have to use all these platforms and be on twitter and facebook and update constantly and connect and push. >> i use the internet constantly to find things i need.
7:47am
if i'm looking for a new product, if i need a salon and on the west coast i use the internet and if i don't find a website i go someplace else. >> do you use google? >> yes. >> it's a monopoly. they control so much of the web's traffic. >> it's how i use and find businesses when i'm in an area that i don't know well and if you don't have a website odds are i'm not going to use you. >> i'm glad you said website not facebook page. >> i don't care about facebook page. if you have a website i want to check you out and see more about you. the internet may be good, social media i'm not as concerned about. >> that's right. >> the internet i think does serve a purpose. >> there seems to be a line and there's a glass ceiling that i talk about, it's one thing to have a website, that's fine, for people to find you. the problem with the glass ceiling you can only advance so far because the web has become corporate. it's become owned by large corporations that pick and choose winners and losers all the time. unfortunately if you're a small business entrepreneur you're a
7:48am
loser. >> there are always great stories of a youtube video that has gone viral that has helped create a business. i'm mystified why you don't buy that. i buy into the argument that on the whole it's tough out there, and rising to the top is a tough slog but there are going to be some winners in the small business community. >> i don't think so. there's barely any winners. >> you think the percentage is too low? >> look at the truth behind youtube. 70% of their views are outside of the united states, 70% of the viewers. most videos go unviewed until this is the thing no one talks brk t about it, the media or celebrity links to it. it spreads because of the media, it doesn't spread by virtue on youtube. >> you have a lot of twitter followers. >> i do. >> you have a shih-tzu of
7:49am
twitter followers. how did that happen if you're a small business? >> because no one asks the how. twitter gave them to me. >> how many followers? >> about 700,000. twitter gave them to me. >> what do you mean? >> let me restate twitter gave them to me. i was out with my ex-wife, still getting used to saying ex-wife, promoting early detection of breast cancer across america. in 2007 twitter had a public time line feature and they promoted me so when i went out to do the tour i said you're promoting my account before, how about we do it for breast cancer and i became the most followed non-brand, non-celebrity, knob-media outlet, i'm still up there on twitter because of the suggested user list which jetblue, zappos, dell, there are many companies on that list that do not disclose that and instead
7:50am
claim social media success. >> interesting. >> b.j. thank you for being here. >> it's my pleasure. >> the book is "social media is bull --" and you know the rest. >> thank you guys so much. coming up at the top of the hour a former presidential candidate squares off with a former white house press secretary, steve forks and bill burton will talk politics and the democratic national convention in just a bit. "squawk" will be right back. >> up next on "squawk box," don't start your day without knowing the names that will make you money. joe has your list of stocks to watch, right after the break. , we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying...
7:51am
[ all ] i'm with scottrade.
7:52am
7:53am
♪ interesting "in the jungle." >> mighty jungle. >> "in the mighty jungle." ♪ >> this is neat. >> i was wondering how long, whether i'd have time to do anything by the time you understood why we're playing this. >> i'm surprised we haven't done cartoons from "the lion king." little simba. >> i'm joe kernen with joe kernen and andrew dice sorkin.
7:54am
that's what one person suggested. look how nervous you are. look at stocks to watch this morning, what are we going to start with. let me see i'll start with campbell's, soup is good food, fourth quarter 41 cents a share, two cents ahead of expectations, revenue also above and the guidance goes to $2.51 to $2.57, and that's versus a $2.52. conagra upgraded to overweight from neutral, general mills downgraded to neutral from overweight so conagra goes up, general mills goes down. smithfield foods, 40 cents a share, four cents below expectations, revenue is also a little shy and facebook continuing to touch post ipo lows, andrew has a great piece,
7:55am
i haven't read it yet but a lot of people on twitter are talking about it. >> good. we'll talk more about it then. >> cramer loves the piece. medicis agreed to be bought by valeant and ibm upgraded to overweight from equal weight at barclays. coming up, back to business on wall street, we'll look at issues facing the markets other than the election this fall. neel kashkari will join us, and senator jack reed is live with us from charlotte to talk about the democratic convention. "squawk" is back in two minutes with a very big hour. at optionsxpress we're all about options trading.
7:56am
7:57am
we create easy to use, powerful trading tools for all. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! strategies, chains, positions. we put 'em all on one screen! could we make placing a trade any easier? mmmm...could we?
7:58am
open an account today and get a free 13-month e ibd™ subscription when you call 1-888-280-0149 now. optionsxpress by charles schwab. your money, your vote. the democrats kicking off their convention in charlotte, north carolina, this week. we'll ask senator jack reed what investors can expect to hear from the obama campaign. and the political showdown. bill burton was deputy white house press secretary for the obama administration until last year. he will face off with steve foshlz on jobs, the economy and
7:59am
the tone of the campaign. >> you're on, mr. popular. neel kashkari's take on economic growth, the potential for questie3 and the best bets your portfolio. third hour of "squawk" starts right now. ♪ welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky quick and andrew dice sorkin. how can i not now that i've -- >> i have to work on my dice clay impressions. >> he was andrew, three names and just throws off -- i can't believe it took me this long and i stole it. >> i'm going to start having a potty mouth on the air. then we'll start worrying. >> that's all right. we'll get that elton john "lion king" stuff together and play it
8:00am
all. andrew got back from the ultimate one percenter vacation in luxury spots where, i mean the income disparity must have been very clear to you. you're worried about it here. over there it must kill you over there. >> as i said to you -- >> didn't stop you from going on the unbelievable safaris and watching cheetahs tear wil wildebeests apart. there's a tapeworm slithering in between my toes that's coming out of your large intestine, right after me right now. >> trust me if you're on the one percenter safari there's no tapeworms. let's talk about our headlines, valeant pharmaceuticals is buying medicis for $44 per share, a 39% premium. the deal boosts skin care offerings adding botox
8:01am
competitor, you pronounce is disport? >> i don't know, andrew, i'm thinking about it, but it's the needles that i'm worried about. wouldn't that hurt? >> yes. >> supposedly i could have it, i'm going to ask forbes when we talk to him. do you go into this stuff? >> i haven't been on a safari yet. i prefer to watch them. cutting hubs of millions of dollars from their tax bills, eric schneiderman wants documents that would reveal whether companies converted certain management fields for fund investment. bain is among the firms. schneiderman is a democrat, has ties to the obama administration, and there are questions whether he's seeking to embarrass the industry. reuters reports the irs looked into this and took no formal action after launching a probe five years ago of the same tax
8:02am
strategies. the democratic national convention is just opening in charlotte, north carolina, delegates are going to be voting on the party's platform today, then tonight first lady michelle caruso cabrera is going to be speaking and cnbc's john harwood joins us with more. john? >> reporter: andrew, president obama got slapped around for several days at the republican convention in tampa last week and he got slapped around yesterday, paul ryan was out on the campaign trail said president obama can't tell you you're better off an four years ago. jimmy carter's days look like the good old days compared to president obama. time for president obama to slap back. he got a warmup after mitt romney said that you'd fire a football coach with the record like president obama's. he made fun of republican's plan for the economy. here is president obama. >> on first down, he hikes taxes on nearly $2,000 on the average family with kids in order to pay for a massive tax cut for
8:03am
multimillion naaire multimillionaires. second down he calls an audible and undoes reforms that are there to prevent another financial crisis and bailout and third down he calls for a hail mary, ending medicare as we know it by giving seniors a voucher that leaves them to pay any additional costs out of their pocket. >> reporter: now the president ended that little football metaphor telling voters they need to punt the republican plan but he'll have to lay out a little bit more of his own vision for the next four years, that's what democratic stratties and pollsters tell me. we'll see if he does that tonight. you have michelle caruso cabrera one week after ann romney addressed the republican convention, michelle caruso cabrera will have her say, she's got high poll numbers such as ann romney does and andrew, i'll toss it back to you but could you, please, tell joe it's
8:04am
wildebeest, not wild-e-beast? >> is it primmer or primer? >> primmer. >> there's another guy with better hair than you. >> who is that? >> john edwards, what's he your vice presidential guy, just the election before last. >> he wasn't my vice presidential guy. he was the democratic vice presidential guy. >> i misspoke, i misspoke. but -- >> you should ask bill burton who is coming on after me about john edwards, cotell you all about him. >> david axelrod was working for edwards back then? >> axelrod was working for edwards in 2004 and bill burton was walking for dick gephardt who you may remember as a democratic leader in congress. >> they are letting jimmy carter be there in some capacity. >> video. >> that is a little weird, considering that the other side is using the carter years as, you know, "welcome back carter"
8:05am
we've heard that, not "welcome back cotter." >> there are little swing voters who remember jimmy carter. >> i voted for him. i copped to that before? >> you voted for carter? >> i was in boulder in college. >> do you still have the posters hanging in your home? >> i have deep, deep scars, guilt and shame but i don't have any posters. >> you know wildebeest is african for wild beast? >> sorry i like to speak english, john, but thanks for the correction. what do you think of andrew dice sorkin? how did we miss that? >> reporter: pretty good. >> a year and a half we finally figured it out. >> reporter: i'm surprised it took you a while to get there. >> somebody else send that and wildebeest is spelled b-e-e-s-t.
8:06am
>> it's the wild breast, not beast. >> five bucks if joe can spell afrikance. >> afri what? i'm not doing quillses. >> it was k-a-n-s. chrysler reported a 14.1% increase in auto sales for august, better than the 11.7% increase analysts were expecting, chrysler's best august in five years and its 29th consecutive month of year over year increases so at least there is some good news out there as well. we'll keep an eye on the rest of the auto sales as they come in. in global headlines, markets closely watching the ecb meeting on thursday. the european central bank is expected to announce details of a bond buying program to fight the region's sovereign debt crisis. ahead of that gathering, ecb president mario draghi is
8:07am
telling european lawmakers that purchases of short term sovereign bonds by the central bank would not breach eu rules and that's been pretty important. markets have taken that as a sign that you could really see some of these big moves they've been hoping for. that was news that he was out with yesterday. this morning you can see in europe that the ftse is down 44 points in france, the cac is off 13 points and germany the dax off by 19 points. italy and spain see a little bit of green arrow there is. australia's central bank is holding interest rates unchanged at 3.5% for a third straight month. policymakers say past cuts have yet to be fully felt but they also note that there is a lot of uncertainty about the outlook for china. let's get back, people tweeted in -- >> andrew dice stuff? >>, foi goi forgot about this, realize no one remembers jimmy
8:08am
carter there was a little rabbit, a bunny swimming towards, he was in a boat and the bunny was swimming towards carter and for some reason he got worried and was trying to hit the bunny with the oar. do you remember that? you can find that. google it. you remember that, right? >> yes. >> it was like this bunny is attacking. trying to hit, someone tweeted in that. anyway -- >> by the way, when john hits you next on wild beasts or whatever you called it. afrikans it's vildebeast. chairman of forbes and bill co-founderf priorities in action and former white house press secretary. guy that know what to emphasize and what not and not how to spin things but you're very effective, do you make a big deal out of jimmy carter and my
8:09am
other question was do you talk a lot about obama care, because it's still unpopular. how do you handle both of those things? >> hopefully nobody's going to talk about jimmy carter attacking bunnies like you guys have been doing. no, i think that this convention is about three big things, one it's an opportunity to fill in the blanks that romney left out from his speech last week, two, i think you'll see a lot of democrats talking about the accomplishments over the last four years and the progress we've made and three, what is the vision for the future, what is next for the american people if president obama is reelected. so no bunnies. i think that yes there will be some talk of health care reform but it should be a lot of fun. it should be a lot of fun. >> what do you think, steve? >> i think mr. burton's doing a very good job on putting a spin on a convention where i think you're going to see a good amount of grievance politics and the like, the economy, worst recovery of any economy in american history from a sharp
8:10am
downturn, even during the depression you had a sharper upturn when it turned in 1932-'33. they'll try to put a happy face on it and even though they're not attacking bunnies i don't think they'll make headway in attracting independent voters. grievance politics doesn't ultimately play in america. >> what do you say, bill? >> i think steve forbes is a smart financial guy so he knows that yes this is, this recovery has been sort of at the same pace as all the different recoveries that happened over the course of the last century since the great depression and it was the deepest hole we've been in and yes it takes a long time to dig our way out but the president helped to create 4.5 million new jobs since the recovery started and creating jobs, not losing jobs now. the economy is growing, not shrinking. if the american people decide they see the convention and what president obama has to say and want to keep moving in the direction or do what mitt romney says, cut taxes on the wealthy and try to grow the economy that
8:11am
way which has frankly only failed in the past. >> the record shows that this is a feeble recovery, compared that to ronald reagan in the 1980s, higher unemployment than in this downturn and when the tax cuts kicked in and the inflation was fought the economy read a roaring comeback. that is history. >> it was not as steep a downturn as we have now. >> romney wants to cut tax rates across the board as ronald reagan did in the early '80s and john kennedy in the 1960s. he wants to stop the binge spending and repeal obama care so patients can control health care instead of unaccountable, unelected bureaucrats. >> you don't have to take my word for t even independent analysts say mitt romney's plan by cutting taxes aggressively for the wealthy will necessarily raise taxes for the middle class families on average $2,000 a year. >> you take the guy's proposal,
8:12am
ignore it and put stuff in he didn't put in at all. i could say president obama's proposing 100% tax increase. did he do it, no, but he must do it. >> this is independent analysis. >> not what your analysts put in it, 20% across the board tax cut, that's good, reagan tried it, kennedy tried it, it worked when it's been done and in terms of obama care, what about those 15 unelected bureaucrats who are going to tell us what we can and cannot have. are you going to highlight that at the convention? i don't think so. this election is about between freedom and big government, and the american people are going to opt for freedom, not more big government especially when you come between a doctor and a patient. >> i think it is about big choices but i think it's more about progress versus going back to the policies of the past that got us into this disaster we're in right now. >> it's not going back to the policies of the past. romney is not a tax and spender. he's not going to weaken the dollar and he's certainly going
8:13am
to fight on new entitlements and reform positively old entitlements and just for the record on medicare and social security, nothing happens if you're born before 1957, you stay the same, for younger people we know there's a big problem, positive reforms can come and have to come and should come. >> all right, that's also not true unfortunately because the way that they would change the program would have an impact on seniors over 55, and people who are currently beneficiaries in medicare. i want to say one thing because i think there is a fundamental difference in this race on economic policy and i think people come to the table with different opinions but mitt romney missed a big opportunity last week to lay out exactly why he thinks cutting taxes for the wealthy is going to be what grows the economy for the american people. we could add a big discussion about that. but he missed his opportunity. >> you cite your party line very well, tax cuts on wealthy, john kennedy did the same thing, ronald reagan, same thing, across the board tax cuts,
8:14am
lowering the risk taking success and the economy moves ahead. this is why i wrote a book "freedom manifesto." i think that this is what thisc do you want to control your lives, government or we the people, individuals. >> i think it's worth having this conversation, because tax cuts for the wealthy is the centerpiece of mitt romney's economic argument. he didn't take any time to go ahead and defend that or explain to the american people why he thinks that for some reason the economy -- >> so john kennedy and ronald reagan were wrong having tax rates cut across the board and 20% lowering tax rates. why is that a tax increase? answer me that, please. >> for middle class americans taxes would actually go up and that's not my analysis, that's what independent analysts -- >> you take one left wing think tank that puts numbers in that weren't there. you put in numbers that aren't there. >> i understand that this feels
8:15am
uncomfortable to talk about why tax cuts for the wealthy are so -- >> no, i this i it's amazing you have to cite the mantra tax cuts for the wealthy nor this miserable performing economy, ignore obama care and ignore the fact that romney cuts tax rates on middle income americans. hooray. >> hold on, give me a second opinion at the end of the day we don't have to talk about what happens when you cut taxes for the wealthy and what a more fair tax system looks like and what could theoretically happen. we have current examples of what happens. bill clinton is going to be speaking on wednesday night and i think that that takes this conversation from the philosophical to the empirical and we saw what happened when there was a more fair tax system where the wealthy paid their fair share and the middle class was able to grow and we saw president george w. bush whose tax policy was a disaster for the economy and left us in a debt that is very large and very difficult to repay.
8:16am
>> two quick things on that. the clinton tax increases -- >> we have the two different examples and the american people can decide and no matter how much you scream about how important it is to cut taxes for rich people that's not the path to prosperity to are this country. >> they have you primed very well. the 1993 clinton tax increases slowed the economy down from 1992, which is why he lost control of congress in 1994, with the republican congress in and cut some spending, the economy started to revive and clinton got a second term, he cut the taxes, including the capital gains levy and the economy prospered for it. the bush tax cuts of 2003 worked. what was a disaster was the federal reserve's weak dollar policy, government -- >> no, not the fact that we're spending money out of the treasury to get to wealthier folks that hurt the entire economy. i don't think the problem was the fed, steve. i think the problem was the fact that we had a president who didn't have the economic sense to grow the middle class and the economy that way.
8:17am
>> you need to learn central banking, mr. burton. >> gentlemen, thank you. >> i'll check it out, steve. >> steve forbes and bill burton. >> central banks, thank you. >> wildebeest, a gnu. gary ga-nu. >> i have a picture of a wildebeest. >> harwood probably doesn't know it's called a gnu. one thing that people come to twitter. >> i have people now sending me andrew dice clay jokes. i have a clean one for later. when we come back, fed policy, the economy and the november election, we'll talk to neel kashkari on how to combat market uncertainty and global investment opportunities. coming up in the next half hour we'll talk to democratic senator jack reed about what he expects to hear from the obama campaign at the convention this week. as we head to break, german kans lar angela merkel taking a short
8:18am
break from her worries, attended a bavarian beer festival some 3,000 people. >> that can explain a lot. the sd from capital one, sven's home security gets the most rewards of any small business credit card! how does this thing work? oh, i like it! [ garth ] sven's small business earns 2% cash back on every purchase, every day! woo-hoo!!! so that's ten security gators, right? put them on my spark card! why settle for less? testing hot tar... great businesses deserve the most rewards! [ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet? here's your invoice. looking for a better place to put your cash? here's one you may not have thought of -- fidelity. now you don't have to go to a bank to get the things you want from a bank, like no-fee atms, all over the world. free checkwriting and mobile deposits. now depositing a check is as easy as taking a picture. free online bill payments.
8:19am
a highly acclaimed credit card with 2% cash back into your fidelity account. open a fidelity cash management account today and discover another reason
8:20am
8:21am
u.s. stocks coming off a positive august but finishing the month off with two weeks of losses. neel kashkari is the head of global equities for pimco's $6.4 billion fund and served a senior adviser to former treasury secretary hank paulsen. neel good morning to you. one of the big issues we have to ask this time around is what we think about bernanke's speech on friday. i know that bill gross was tweeting about it, he says that qe3 is almost a certainty at that point. do you agree? >> we think so. chairman bernanke laid out a compelling case of his analysis, the fed's analysis for why qes one and two worked in their assessme assessment, why they're necessary and why the risks and costs are limited. we think qe3 is a virtual certainty. as we talked about before, we don't think more liquidity will lead to long-term sustainable real economic growth. we think it can push up the prices of assets, financial
8:22am
assets and make the headlines look better but ultimately we have structural challenges facing our economy and there's only so much bernanke can do. >> what does that mean and how should the markets be reacting to the thought of more qe then? >> i think the markets have priced in basically expecting that qe will be there, flooding liquidity into the system, the money has to go somewhere, and it ends up pushing up the prices of these liquid assets, and especially out the risk curve, equi equities, high yield, et cetera. lot of that is already baked in. the definite sill in the details. if he announces an open-ended quantitative easing program, meaning not $500 billion, not $1 trillion but we'll continue to expand our balance sheets as long as unemployment stands high that could exceed the market's expectations. whatever he does, it's going to be short-lived, it's not going to lead to long-term sustainable economic growth. it's not going to bring our unemployment rate back down to 6% or lower, where we need it to. that's going to require congress and the executive branch, so in
8:23am
many ways bernanke is trying to treat the symptoms. it's better to treat the symptoms than to do nothing, but i think he knows that he doesn't have the tools necessary to treat the underlying disease. >> you know, we are stuck in this new normal that your colleague, mohamed el erian raised. it's led us through this worse than expected return to prosperity, after the downturn that we saw, nobody's arguing with that. we have a lot of things ahead of us, but there is a column out today by roger altman in the financial times and says the headwinds are starting to dissipate and he thinks no matter who gets elected you are going to see a surge in the economy that comes no matter what's happening. part of it he thinks will be led by a housing recovery and no matter who gets elected you'll see a feast after the famine
8:24am
we've been through. do you think that's likely or possible? >> i don't want to say it's impossible. i certainly as an american citizen hope that he's right. i don't think we can count on it. you're right, housing has certainly stopped, we talk about addition to growth by stopping subtraction so house something no longer going to be the anchor on the economy, bringing us down, but our expectation is housing is more likely to bounce along rather than lead a very strong recovery from here. housing had a lot of de-leveraging to go through, the government is spending well beyond $1 trillion deficits every year, while we bring the deficits under control that's also could be a short term headwind on our economic growth so i hope mr. altman is right but our view is there are long-term major structural factors that will take more than a year or two to solve unfortunately. >> neel, is it a coincidence you're coming to this conclusion about qe3 and you look at gold and oil and you look at the recent euro/dollar relationship,
8:25am
i mean, is that all coincidence? we had steve forbes ranting about destroying the dollar and things like that and we're seeing these commodities go up and yet interest rates are being held where they are and pimco for a while has thought maybe that that party's over, i think. i wonder if we're spring loading with this weak dollar and with some of these policies spring loading a real return of the bond vigilantes. that must be a risk you're worried about, isn't it in. >> it is a risk we're worried about. it's not just the u.s. central bank but also the ecb. you have global banks creating this much paper money going into the system it has to go somewhere. some of it is sitting on bank balance sheets, some in reserves. lot of it is riskier assets, whether it's equities, commodities, lifting up the prices of the assets in gold across the board. we're watching these carefully. we think people should not have a false sense of security.
8:26am
markets seem very calm right now. people believe that the fed is going to act, the ecb is going to get it right, the election is going to go through, of course it's going to go through but it's going to lead to an end of gridlock and the fiscal cliff is going to be dealt with. those are four major policy factors coming to a head in the next few months so our message we've been consistent, joe, you've given me a hard time about this, continue to invest but very cautious and selective investing in higher quality companies, thisser' going to be more resilient against the various factors we're worried about. >> are you a total socialist at this point? you worked for paulsen but are you going to charlotte? where are you? are you drinking the pimco kool-aid, neel? >> pimco embraces a wide range of opinions. >> you have the most conservative guy mccally siting
8:27am
up on the hill. he looks like a her mitt or something now. >> my view us haven't changed. i think we're pretty much down the center of the fairway. >> me, too. all right, thanks, neel. >> thank you. all right, i like him, he's a good sport. coming up democrats, you're going to tell your andrew dice sorkin joke. >> i don't know if it's appropriate. >> when we come back. democrats looking to create buzz when they kick off their convention in charlotte. stuff. companies have to invest in making things. infrastructure, construction, production. we need it now more than ever. chevron's putting more than $8 billion dollars back in the u.s. economy this year. in pipes, cement, steel, jobs, energy. we need to get the wheels turning. i'm proud of that. making real things... for real. ...that make a real difference. ♪
8:28am
i don't have to use gas. i am probably going to the gas station about once a month. drive around town all the time doing errands and never ever have to fill up gas in the city. i very rarely put gas in my chevy volt. last time i was at a gas station was about...i would say... two months ago. the last time i went to the gas station must have been about three months ago. i go to the gas station such a small amount that i forget how to put gas in my car. ♪ that i forget how to put gas in my car.
8:29am
at merrill lynch, we understand the importance of your goals. today, our financial advisors lead from a new position of strength. together with bank of america, they have access to more resources than ever before. a steadfast commitment to help you achieve your financial goals in life. that's the power of the right advisor. that's merrill lynch.
8:30am
welcome back to "squawk box." let's get a check on the markets. kevin ferry joins us from the cme in chicago and steve liesman is on set. i guess i would ask both of you gentlemen, did you see kneel kashkari say qe3 is done. >> i agree with him. >> you do? >> i come back from jackson hole convinlsed the fed is going to act. >> you thought it was not a good idea. >> i thought it was more sort of 55/45 they would but more in the 70% probability. >> did you hear my question? >> i didn't, i was in the meeting. >> you look at gold and the way the dollar has been acting and where oil is and then you look at how rates are staying low and all these things are running and aren't we springloading a return of bond vigilantes, one day say enough? isn't this scary? no no? >> it's interesting, joe, to
8:31am
think, and i will get into kc kevin's thought on this, i don't know that vigilantes can talk. you think they're doing a muzzle on the vigilantes. there's a huge debate in jackson hole over the process of inflation, okay, and how this is going to manifest itself. where the doves of saying this huge output gap, all the slack in the economy and the response of the hawks is very interesting to me. they say if the output gap is that big, why is the unemployment rate relative -- sorry, the inflation rate relatively so high? where is the deflation that your model would give us? turn to the hawks, what is your model? they don't really have a model for when inflation will happen but their model is as follows. you create all these excess reserves and at some point in time those excess reserves become loans and real money in the economy, and that's what ignites inflation. there's no way to predict when it will happen. it's when the animal spirits revive themselves and start going. >> and when it happens it's a
8:32am
little late to put it back in the barn. >> then i get to the response of the doves, okay, if you're right and that's the case and the process of inflation and it doesn't matter whether or not we have high unemployment, then we have tools to put the genie back in the bottle. we have all of these ways to soak up excess reserves. that's the debate going on right now, what is the process of inflation and if it happens, what do we do when it happens. the other thing we said, we should be so lucky to have that problem because we're not there yet. >> kevin? >> i want to be a vigilante! >> you want to be but you can't be, if you wanted to be, kevin. >> it's a money losing proposition in america at least. >> right. >> that's the key. go ahead and sell them. i think last week is a great example, you had a significant positive economic news, move in the first two weeks of august and a complete reversal, a mass of buying so to the extent the fed rhetoric is working, i think that they're trapping themselves
8:33am
in having to do more, because the fact is, it's worked. >> kevin maybe they don't have to do it immediately. what is your sense on timing? >> i'm a little bit surprised, i would say keep stringing people along until you have to. this plays into the politics of the weak. the important nun on friday will be weak enough to mitigate any pop but what if it's good and what if there are upward revisions? then the whole story changes and the concept of qe changes. >> kevin, i have to push back just a little bit on that and my read of the board, there is a big number, many members i think feel there's very little that can happen this week in the way of data to change the fed from its appointed task. neither rain nor snow nor bad data i think will keep this. >> i was talking about the politics there, steve, not the fed. i would agree they wouldn't deal with that.
8:34am
so you're going to get more of it and what i would say also and look at the corporate bond market, very robust summer and very low coupons so i think that under other circumstances with the stock market that reacted like this and a bond market functioning like this, there would be euphoria in the world and instead there's a lot of skepticism and a lot of trepidation. >> can we talk about the ecb? >> can i ask you quick before you do, bullard said if you see action, when he was with us on set about a week and a half ago, if you see action it's going to be smaller programs, not these big things. >> it could be monthly. it could be monthly. i've heard that mentioned a couple times. i don't know where the actual support is for the action. they may move away from this lump sum. we could do something like a $75 billion number and say we're going to revaluate at the next meeting. keep it open-ended which gives you that kind of neverending verbal intervention concept. >> kind of like quarter point rises or lower dropping in
8:35am
interest rates. >> that's always been the problem with what the fed has state about qe, right, they said qe is the analog of rate hikes except for the fact they never did it that way, never did it in increments with rate hikes or rate cuts. >> maybe that's how you start to wean yourself. >> maybe. this way you could put a stop to it and go month to month and we'll do another fed survey. quickly on the ecb i'm wondering if the market may be ahead of itself. i think we're going to get some details from draghi on thursday but not all the details we want. what i'm hearing is that before they give the go-ahead they're going to wait until this german court ruling on september 12th and then we're going to get more details for the program. i think draghi will go a little bit further than he's gone in the past but it's not going to be like we got with the fed like a term sheet, here is the program, here is the amount, here is the process. i think that has to wait. >> kevin if that's the case is the market disappointed, is it impatie impatient? >> i think it's shown some impatience and also shown that it's not very liquid.
8:36am
either going down or going up, so i think that's the real caution. there could be hiccups in this, becky, in the short term, when people have to really get something done. and i would say that that's the real fear. they can do all the qe they want. the real fear in the back of every bond trader's mind there's no way you get out of this. there's no exit. the exit strategy is held to maturi maturity. >> all right. thanks. >> they have to reverse that to have an effect, kevin. that's a critical piece of psychology in the market, if they don't fix that they'll not get help around the market. >> what you missed with all of the trouser talk. >> trouser talk? >> trout talk. remember i was implying we were laughing, you were talking about trouts. it was just so much -- and the camera wasn't on us, of his trout.
8:37am
while you were fishing you found out about qe3. >> in different places. i can't count on things you tell me. >> why? >> you were very doubtful. >> i was in the middle. now i've moved over to it's going to happen. >> you've changed. this is different. >> just from looking at me? >> nevermind, this is a real reckoning for me. i believe you when you -- >> i think it's -- look, joe, we had to hear the speech, that had to happen. i had to catch some fish before i could know what the story was. >> trouser trout. from the grocery aisles and among the stock stories we'll bring you the names to watch ahead of the short trading week and jack reed's expectations for the dnc convention. [ male announcer ] what if you had thermal night-vision goggles,
8:38am
like in a special ops mission? you'd spot movement, gather intelligence
8:39am
with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account.
8:40am
welcome back to "squawk box." let's check on some of the stocks on the move. medicis higher on news it will be bought by valeant for $44 per share.
8:41am
the shares plunged a year ago after police investigated the deaths of ceo jonah, how do you pronounce that, his girlfriend and son a few days apart. no wrongdoing found in either case. separately smithfield foods profit below estimates because of weakness in its pork segment and campbell's soup reported stronger sales across most of its food portfolio. coming up the buzz from the dnc convention, we'll talk to democratic senate jack reed about the president's re-election bid and what investors are likely to take away from charlotte. it's the "squawk box" nfl kickoff. and the league is well represented. jets owner woody johnson, cowboys owner, squer owner, jer new york giants chairman steve tisch, they'll go head-to-head
8:42am
tomorrow on "squawk box."
8:43am
sometimes investing opportunities are hard to spot. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.
8:44am
democrats are descending on charlotte this week for the dnc convention and senator jack reed joins us from washington this morning, before he leaves for north carolina and senator good morning to you. >> good morning to you. >> give us a preview of what you expect, i have a specific question actually around bain and private equity, which is there's a report out this morning that they plan at the convention to bring out a number of employees or former employees
8:45am
from portfolio companies that were run by bain. do you think that's going to be a successful talking point? >> well i think the major talking point the president will make was he inherited a cries i of immense proportions from president george w. bush and through his leadership particularly first two years was able to pull the country back from the worst financial crisis we've seen steady growth, not sufficient job growth and that the future requires the same kind of leadership, not a change, not a reverse of the policies of george w. bush. >> do you think that's a successful argument in terms of answering the question romney and ryan raised which is four years later are we better off? >> i think it will be. people will recognize four years ago we were at the, on the edge literally. the financial markets were crashing, losing 800,000 jobs a month, now we're seeing steady job growth, not sufficient job growth and we're also seeing i think a president that has grappled with issues not only
8:46am
economic issues at home but international issues and i think that path of accomplishment will be once people recognize it will be recognized by the people. >> john kerry is expected to talk on thursday about national security and i imagine bin laden is going to become part of that conversation. how do you think that will play? johner canni john kerry is a thoughtful and articulate individual and bin laden with be a big part of that speech in the sense that president has successfully engaged in the war on terror, he has not only removed our forces from iraq, doing the is aimin afghanistan and he's also, through his efforts, but through the bravery really of a lot of special operations forces and military personnel have dealt sop serious blows to al qaeda. >> there's a fine line in terms of how you play that in terms of people arguing that he's politicizing that. >> that's i think always the situation. i think the first thing you do
8:47am
have to recognize is that at the point of the spear as they say quite accurately are young americans, men and women who fight with courage, valor and distinction. they deserve the lion's share of the credit. ultimately the decisions have to be made by a president and they have to be made understanding the sacrifices those young men and women make every day. this man made critical the size of the effective decisions. >> it's been a while and the term tax cuts for the wealthy, we just had one of the president's former deputy press secretaries and literally i think he said tax cuts for the wealthy about 10 or 12 times in the space of a three-minute interview. someone wrote in and pointed out the bush tax cuts which were across the board the only ones that you really have a problem with are the ones that are up at the top 2% and that you want to extend all of the bush tax cuts except for those at the top, so
8:48am
the point was that maybe they do help the overall economy, when most of them, 98% of them did help and you're very hesitant to let those tax cuts expire so what if people look into that situation. don't you think they'll get tired of hearing the demagoguing of the tax cuts for the wealthy? >> i don't think they will. we have a progressive tax system so the tax benefits that are useful for middle income americans, very useful, they put it right back in the economy, but at some point you have to have the revenue to help reduce this deficit, just doing the math and i think the american people have done that, we've made significant reductions in discretionary spending, over $1 trillion over the last two years, but we have to add revenue and i think every american, most americans at least recognize -- >> the top 1% or it%, there's not enough money there. >> there's no attempt to go
8:49am
100%. >> i know, but letting those expire doesn't really, it's a much, saves how much compared to, it's like $4 trillion over ten years and if you do it just on the rich, i don't know, it's i think $1 trillion so you're left with three that were in the -- >> you're left with $1 trillion but that's $1 trillion less of cuts to the veterans administration, to the department of defense, to programs that are absolutely critical to middle income americans. >> you like the other bush tax cuts? >> well, i think those bush tax cuts for those individuals making $250,000 have been the major force of stimulus really over the last two years since we haven't been able to do fiscal stimulus in the way perhaps we should. so those cuts right now i think we're going to provide them because we need to keep the economy moving. but the idea of not being able to increase revenue, the burden will shift dramatically to the middle class in terms of
8:50am
programs that are decisive to them and their future and the future of their families. >> senator thank you for joining us. >> thank you. >> have fun at the convention. >> thanks. coming up, would you stop looking at those things?up. >> yes. >> it was tough. >> you're like, you remember alien? that one guy left that. she said no. >> you're bringing these things back to us. these parasites. god knows. what are those things call eed? >> i forget the specific name. watch all your body parts to see if they start swelling up and if it's contagious -- go away. vacation's over. are you going to show that pi picture of the monkey on the white table cloth? >> i might. >> head down to new york stock exchange for a look at some of the stocks on the move ahead of this short trading week. ♪
8:51am
♪ i can do anything ♪ i can do anything today ♪ i can go anywhere ♪ i can go anywhere today ♪ la la la la la la la [ male announcer ] dow solutions help millions of people by helping to make gluten free bread that doesn't taste gluten free.
8:52am
together, the elements of science and the human element can solve anything. solutionism. the new optimism.
8:53am
8:54am
welcome back. jim cramer, david faber join us right now and guys, welcome back. i know you have a lot to talk about today. we are ready to get back to business. what are you watching? >> facebook. why? because angela sorkin finally nailed the guy. this was one of the most important pieces i've seen. who screwed up? morgan stanley. was it the z man? no. thank you. thank you because we need to put faces and names on people who lose a lot of money. you have courage, andrew. >> courage. >> courage. >> thank you. >> retribution, you know that. there's a big mob that's not going to like what you did. >> i know, it's not going to be happy for everybody. but we're going to talk about some of this, i believe, in the 10:00 hour. >> that's right. >> andrew's going to join us at 10:00 to discuss today's column. it is a big week in a lot of ways. just had a conversation with one of the guys i like to talk to in the morning, hedge fund manager. september's going to be a big
8:55am
month. thursday certainly, the eu, we're back. europe is back. spain, capital flight. >> but they've -- guys, they've been on vacation. their vacation ends. remember when we had to worry about the supreme court in health care? we've got a much bigger issue. >> we talkeded with mark grant this morning. he thinks this is the real week you start to feel pressure for it. liesman has said he's not expecting a whole lot of details. you think there's a lot of market disappointment? >> wow. >> yeah, i'm going to say point-blank, yes. >> you know what we'll be doing back here? watching those ten-years. spanish, italian. >> and watch bbva stock and -- it's now become too important. no more joking around. doing mexican deal. 80% non spain, but the 20% that
8:56am
is spain. >> all right, guys, we'll see you in just a few minutes. coming up, the stock of the day. is it in your portfolio? find out next after the break. >> tomorrow, the democrats energizing their base. we've got a big lineup to talk about business, labor and politics at the dnc convention. bill richardson, andy stern, congressman chris van hollen and a whole lot more. plus, an exclusive with pepsi chairman and ceo. don't miss "squawk box" starting tomorrow at 6:00 a.m. eastern. , any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade.
8:57am
there's natural gas under my town. it's a game changer. ♪ it means cleaner, cheaper american-made energy. but we've got to be careful how we get it. design the wells to be safe. thousands of jobs. use the most advanced technology to protect our water. billions in the economy. at chevron, if we can't do it right, we won't do it at all. we've got to think long term. we've got to think long term. ♪
8:58am
8:59am
stock of the day is medicine. valley pharmaceuticals, about 2.6 billion in cash. that's a 39% premium. closing price, you know how to do that? closing price on friday, the deal boosts valiant skin care adding botox competitor, dysport. here, around the mouth, little bit on the forehead. involves